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As the lead for Retail at Accenture in India, what are some of the biggest challenges you see retailers facing in today’s market, and how do you help them address these challenges?
The retail industry in India, which is the third largest in the world, is growing at a rapid pace, of a CAGR of about 13 per cent, which is twice that of the global retail industry. However, this growth opportunity is also coupled with challenges like changing consumer behaviour, uncertain supply chains, lack of trained manpower and macro-economic variables putting pressures on profitability of retailers.
The rapid changes in consumer behaviour have accelerated both during and after the pandemic and the biggest enabler has been digital adoption by consumers in India; this has necessitated retailers to adapt and evolve to meet the needs of their consumer base. Retailers are at different levels of maturity in their omnichannel transformation journey. In this context, we have been working with retailers across in enabling their transformation to being an omnichannel retailer, and in turn drive outcomes around brand and revenue growth with a renewed focus on customer experience.
Sourcing and supply chain severely disrupted during the pandemic, aren’t yet in a stable place. There is a need to rethink the sourcing approach to find the right balance of local/global sourcing to achieve an optimal cost picture and mitigate risks. In addition, with a change in channel mix on the backdrop of the channel transition, retailers need to review their fulfilment strategies on the last mile. To this end, we work with retailers on various supply chain transformation areas ranging from network design to warehouse strategy to integrated planning, sourcing, and last mile optimisation.
With consumers being cautious in spending, the product offer, pricing approach and promotions need a review. In our work with retailers focused on a customer centric merchandising approach, leveraging data as well as AI/ML models, is helping retailers across the functions of merchandising, marketing and supply chain in both accelerating growth and profitability.
This is also a good time for retailers to investigate their cost picture and evaluate the need for transformation in both cost of goods sold as well as selling, general and administrative expenses. With sustainability gaining momentum, it has become an important focus area for both consumers and retailers alike – we are helping organisation to traverse from profit to purpose.
What is your approach to driving growth and profitability for your clients, and how do you measure success in these areas?
With a strong focus on driving outcomes, we help companies achieve sustained growth and profitability. Omnichannel transformation is a way for retailers to find new avenues of growth and improve customer experience to further accelerate revenue growth. In addition, our work in merchandising, supply chain and cost transformation help retailers further grow as well as improve profitability. Data led transformation has had a huge impact on all three areas of brand, growth, and profitability.
To share a few examples, working in the merchandising space with a grocery retailer, focused on assortment and space planning resulted in a 3 per cent sales uplift, a 20 per cent Stock Keeping Unit (SKU) reduction and a 0.2 per cent increase in gross margin. Another example is our work with a leading department store with over 100 stores. Using our cost transformation approach, focused on multiple areas such as supply chain, store operations, energy usage, rentals, maintenance, advertising, and travel, helped identify 40 different initiatives, resulting in a 6 per cent savings in costs. The programme also created a future-ready organisation through optimisation of the workforce with a focus on customer experience and a reduction in people costs at stores by 16 per cent.
In what ways do you think technology is transforming the retail industry, and how do you help your clients leverage technology to improve their businesses?
Technology plays a key role in transforming any business and more so in retail which is heavily influenced by frequent changes in consumer behaviour, a business model that has high complexity be it in terms of millions of SKUs in the product range, multitude of categories, or a large and diverse addressable market. Many years ago, a one size fits all approach worked for retailers, but with consumers evolving and adopting digital in a big way, they are pushing retailers for a far more personalised and convenient experience.
In this context, a strong digital core is fundamental to all other strategic needs of an enterprise. Amplifying the role of technology means shifting from a technology landscape of static, standalone parts to interoperable pieces intentionally integrated and leveraging the cloud. The digital core consists of three layers – an infrastructure and security layer, a data and AI layer and an application and platforms layer. And building a digital core is not a one-time project. It must be continuous to incorporate new technologies and business capabilities.
Once a strong digital core is in place, the key applications and platforms that can be built on top, can help drive key business outcomes. For example, consumers today seek greater personalisation and convenience; leveraging data and technology, it is possible for retailers to address specific needs across different customer personas and deliver a relevant and personalised experience. In terms of the product offer and pricing, merchandising platforms can help retailers put together a relevant and affordable assortment that meets the needs in a specific catchment. Pricing and markdown algorithms can help prevent unnecessary discounting and at the same time maximise volume growth leading to better profits. Customer centric supply chains which are built with different service and costs levels catering to different customer segments leverage a strong digital core as well as data to improve availability as well as optimise inventory levels. The examples are endless and there is not an area or function in retail today that does not gain from leveraging the right technology solutions.
How do you stay on top of industry trends and emerging technologies, and what advice do you have for retailers who are looking to innovate and stay ahead of the competition?
We remain laser-focused on staying close to our clients, advising them how to navigate the challenges and providing the right solutions for long term profitable growth. Our experience and breadth of solutions enables us to help our clients navigate today and succeed in the future.
The retail industry has evolved multi-fold times in the last couple of years. Consumers have driven the change and retailers have adopted the changes to be relevant and we believe the industry has done well to navigate the pandemic. However, the challenge now is to keep adapting continuously. This means it is time for a new retail culture, one of constant reset. It is the time to review the consumer offer, mix of channels, sourcing approach, fulfilment strategy, data as well as people approach to stay relevant and drive growth and profitability. This calls for a total enterprise reinvention with a strong digital core. We believe retailers will need to use technology, including cloud, data, and AI along with new ways of working to build greater resilience and new paths for growth.
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